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Infineon & SMIC ink deal to produce DRAM in china
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Monday, December 23, 2002
Semiconductor Manufacturing International Corp. (SMIC), an Si foundry in Shanghai, China, announced that it has reached an agreement with Infineon Technologies AG in Munich, Germany to cooperate on the production of dynamic random access memory chips (DRAMs).
Under the terms of the agreement, Infineon will transfer its 0.14-micron DRAM trench technology to SMIC. In return, SMIC will manufacture these particular products exclusively for Infineon.
SMIC is scheduled to start production of 256Mb double data rate synchronous DRAM (DDR-SDRAM) chips in mid-2003, and secure the production capacity of 20,000 pieces per month in 2005. The two companies will work out details of advanced processes further than 0.11 micron and higher memory densities in future negotiations.
The collaboration will further consolidate Infineon's position in the DRAM market. Besides securing a supplier replacing ProMOS Technologies, the company established itself as a leading provider in the growing Chinese market by entrusting China-based SMIC with production. For example, it can increase price competitiveness because value-added tax is reduced. In addition, it can further increase its share should it renew the agreement with ProMOS.
Stories are somewhat complicated for SMIC, which has Fab1 and Fab2 for 200mm wafer production, with the combined production capacity of 30,000-35,000 wafers per month. The company is, however, supposed to focus on memory chips like DRAMs, because neither of the two plants is yet in full operation and demand for Si foundry work for logic ICs is not too strong. Infineon successfully transferred its technology to a Taiwanese manufacturer, and accordingly, the agreement with Infineon will likely enable SMIC to start production of DRAMs without difficulty.
SMIC has described itself as an Si foundry and focused on logic ICs, decreasing dependence on a specific company in technology and as a customer. The company is supposed to have been pursuing the business model like that established by two Taiwan-based companies: Semiconductor Manufacturing Co., Ltd. (TSMC) and United Microelectronics Corp. (UMC).
The agreement with Infineon is interesting because it is somewhat different from the management policy SMIC has been pursuing. It is difficult for marginal manufacturers to be profitable in the DRAM business, whose profitability fluctuates greatly.
SMIC has to invest in production facilities to realize a monthly production capacity of 200,000 pieces only for DRAMs to be shipped exclusively to Infineon and pay for the technology transfer either in cash or through exchange of shares -- it is unknown which now.
SMIC can draw a clear picture should it decide to become a specialized DRAM manufacturer. If, however, it continues to pursue the position of a logic foundry, it will have an increased burden, because the DRAM business brings little of a synergy effect. And the trench process itself has a limit of development to realize further advanced rules.
By: DocMemory
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